Chickens Coming Home to Roost
China Daily, the Chinese government’s official English-language newspaper, had an interesting report yesterday. Apparently the Chinese chicken industry is getting creamed by U.S. import competition, and is begging the government for protection. This is sort of a “man bites dog” story, in that normally all you hear about is Chinese imports wiping out higher-cost U.S. industries. In this case, imports from America actually seem to be beating domestic Chinese chickens on price, of all things:
From 2006 to 2008, the broiler imports from the US accounted for 68, 66 and 73 percent of the total Chinese broiler imports. The figure jumped to 89 percent during the first half of this year.According to an investigation by the animal agriculture association into six major Chinese broiler companies whose output volume made up for 20 percent of the total, the ratio of output to capacity was 79 percent from 2006 to 2008. It dropped to 66 percent during the first half of this year.
“Price is the key reason behind the shift, as consumers have become more sensitive to it during the financial crisis,” said Ma.
In 2008, China’s broiler meat was priced at an average of 10,482 yuan per ton. It was 9,823 yuan per ton for the US product over the same period, 659 yuan lower.
Of course, nothing appears in China Daily without some point to it. The story draws an implicit but clear link between the Chinese government’s pending decision on protecting domestic chicken producers and President Obama’s upcoming decision whether or not to impose special tariffs on Chinese-made tires. China has vowed to retaliate if Obama goes ahead with the tariffs, and it’s not hard to guess what they might have in mind.
Okay, it’s a terrible pun, but if President Obama signs onto sanctions against Chinese tires, the chickens may literally come home to roost.
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Patrick Chovanec is an associate professor at Tsinghua University’s School of Economics and Management in Beijing, China, where he teaches in the school’s International MBA Program. He blogs at http://chovanec.wordpress.com/ where this post first appeared.
